The planned £400m Global Centre of Rail Excellence (GCRE), which would deliver the world’s first integrated train and rail infrastructure testing facility, has launched a competition to secure an energy and data centre partner which could see a multi-billion-pound investment.
The Welsh Government scheme, which is being delivered via its stand alone but wholly-owned business GCRE Ltd, is earmarked for a 700 hectare site spanning the former Nant Helen opencast mine and Onllwyn Washery in the Dulais Valley.
The data centre investment is not dependent on the testing facility being built and would occupy around 70 hectares of the site. Formal requests for proposals are now being sought by GCRE on the back of strong early stage interest, including from developers who would then secure a data centre operator.
Prior to the now live competition the number of interested parties was in double figures, which included one unsolicited offer for the land site. There is potential for data centres with capacity for several hundred megawatt at the site.
There is increasing data centre investment in Wales, including from US data centre venture Vantage, which has an expanding facility in Cardiff as well as plans for new data centre sites at the former Ford engine plant in Bridgend and at the Welsh Government Bro Tathan business park in the Vale of Glamorgan.
For the rail facility GCRE Ltd has secured £50m from the Cardiff Bay administration and £20m from the Ƶ Government, originally signed off by the former Conservative Westminster administration. This leaves it needing to raise around £330m.
Initial fund raising activities, conducted through a public procurement exercise, focused on securing equity investment. While the process was narrowed down to three potential institutional investors, including those in the US and the Middle East, a deal could not be secured. It then looked to strike a funding deal with a long-term debt provider, but again a deal couldn’t get over the line.
While it continues to engage with potential investors, the likelihood is that additional government funding will be required to fill a gap over what the market is prepared to finance. However, a sale of part of the site for data centre investment would help close that gap. A single 100 megawatt data centre would cost in the region of £1bn, for which several could be delivered at the site.
Proceeds from any land sale for data centre use, subject to planning consent, could be used to help plug the funding gap. While the value of the land would be subject to negotiation, there is potential for a price tag of around £500,000 per hectare.
The GCRE project, which has outline planning consent, would create more than 1,100 permanent jobs in one of the most deprived parts of Wales. GCRE is now looking to get to fixed construction price tag for the project, which would be reduced through value engineering.
Chief executive of CCRE Ltd, Simon Jones, said: "This is a unique opportunity for a long-term partnership with GCRE. The site’s size, power grid and telecoms connectivity make it very attractive for the development of renewable energy assets and data centre infrastructure. 132kV and 400kV power grids cross the site, with excellent future fibre connectivity being progressed for the area.
“This is an important moment for GCRE as we launch an exciting new competition to find a partner that can develop new renewable energy assets on the site and take forward the opportunity for a data centre supported by that energy.
“A partner with the right skills can help us deliver a sustainable energy solution for the site and help GCRE achieve its ambition to be a net zero in operation facility. The work will further enhance the economic attractiveness of the site, particularly as we continue our search for private rail investment.
" The new partnership will be a vital foundation for the future funders of the GCRE railway. Certainty about power and when it will be available is a central theme of the investment discussions we have held with the market. Appointing this partner will be a considerable step towards achieving the wider GCRE vision.
“Launching this competition now, in parallel with our continued work to develop GCRE, supports the mission we have to help rebuild local prosperity. By developing the site as a magnet for world class rail innovation alongside modern renewable energy infrastructure, we can help support the local and regional economies through the creation of new green jobs and skills in this important part of South West Wales.
“This is an open invitation to everyone in the market and we are encouraging interested parties to come forward with creative and imaginative proposals. Through this competition we see opportunities for the development of sustainable energy assets and infrastructure that can help transform the economic fortunes of a deindustrialised area.”
The competition for an energy and data centre partner closes on November 21st. A partner is then expected to be appointed next spring.
Mr Jones added: “Our economy is changing fast as we move towards a net zero future and with the growth of new technology. We’ve seen just recently the major investments being made in large sites that have potential to generate sustainable energy and be a home to infrastructure that can support developments such as AI.
“Wales has to move quickly to ensure it can use its natural assets to take advantage of those opportunities and build a new economic future for itself, particularly in areas like the South Wales coalfield.
“Through GCRE and the modern energy and data infrastructure we can build on the site, we can help give the valleys of South West Wales a new economic future, by harnessing the sustainable energy potential around us and using that as a platform for new green jobs around an international rail cluster. It’s an exciting future and that’s why we’re looking for a quality energy partner to help us achieve it.”
The proposed rail testing project would consist of two electrified 7km looped testing tracks for rolling stock and infrastructure, both designed to operate 24/7 year-round. It would also include train storage and maintenance facilities, a control centre, a 100-bedroom hotel, as well as training and R&D functions. A later phase, outside of the £400m fundraise, could also see a rail-related technology park, potentially privately funded.
The project has received expressions of interest from more than 200 firms looking to utilise its facilities, including Network Rail, Transport for Wales, and leading train manufacturers such as Hitachi and its Spanish rival Construcciones y Auxiliar de Ferrocarriles (CAF), which has a train-making factory in Newport.
